Oil and gas price convergence on the horizon

Oil prices are likely to fall over the next few years, according to Paolo Scaroni, the CEO of oil company Eni. US gas prices are currently about $4 per mmbtu, which compares with about $15 per mmbtu for LPG imported to Asia and about $16 per mmbtu for the energy content of US crude oil. According to Mr Scaroni “These two anomalies, once corrected, move us towards a world in which gas prices are higher and oil prices are lower.”

As we have noted previously, manufacturing and other energy intensive sectors have yet to fully take advantage of low US natural gas prices. Once they do the anomalies Mr Scaroni describes may start to gradually disappear.

Materials Risk provides commodity market insights across your supply chain by highlighting emerging risks and opportunities and providing advice on commodity buying and managing risk. All views expressed on this website are those of Materials Risk only. See our About page and terms and conditions for more details. Materials Risk was founded by Peter Sainsbury who you can follow on Google+ and Quora